Reign of Charles Vi and Maria Theresa

Leopold's successor, Charles VI (1711-40), began building a workable relationship with Hungary after the Treaty of Szatmar. Charles needed the Hungarian Diet's approval for the Pragmatic Sanction, under which the Habsburg monarch was to rule Hungary not as emperor but as a king subject to the restraints of Hungary's constitution and laws. He hoped that the Pragmatic Sanction would keep the Habsburg Empire intact if his daughter, Maria Theresa, succeeded him. The Diet approved the Pragmatic Sanction in 1723, and Hungary thus agreed to became a hereditary monarchy under the Habsburgs for as long as their dynasty existed. In practice, however, Charles and his successors governed almost autocratically, controlling Hungary's foreign affairs, defense, and finance but lacking the power to tax the nobles without their approval. The Habsburgs also maintained Transylvania's separation from Hungary.

Charles organized Hungary's first modern, centralized administration and in 1715 established a standing army under his command, which was entirely funded and manned by the nonnoble population. This policy reduced the nobles' military obligation without abrogating their exemption from taxation. Charles also banned conversion to Protestantism, required civil servants to profess Catholicism, and forbade Protestant students to study abroad.

Maria Theresa (1740-80) faced an immediate challenge from Prussia's Frederick II when she became head of the House of Habsburg. In 1741 she appeared before the Hungarian Diet holding her newborn son and entreated Hungary's nobles to support her. They stood behind her and helped secure her rule. Maria Theresa later took measures to reinforce links with Hungary's magnates. She established special schools to attract Hungarian nobles to Vienna. During her reign, the members of the magnate class lost their Hungarian national identity, including their knowledge of the Hungarian language.

Under Charles and Maria Theresa, Hungary experienced further economic decline. Centuries of Ottoman occupation, rebellion, and war had reduced Hungary's population drastically, and large parts of the country's southern half were almost deserted. A labor shortage developed as landowners restored their estates. In response, the Habsburgs began to colonize Hungary with large numbers of peasants from all over Europe, especially Slovaks, Serbs, Croatians, and Germans. Many Jews also immigrated from Vienna and the empire's Polish lands near the end of the century. Hungary's population more than tripled to 8 million between 1720 and 1787. However, only 39 percent of its people were Magyars, who lived mainly in the center of the country.

A complex patchwork of minority peoples emerged in the lands along Hungary's periphery. Droves of Romanians entered Transylvania during the same period. The Protestant and Catholic Hungarians and Germans who had been there for years had considered the Orthodox Romanians inferior and relegated them to serfdom. In the eighteenth century, leaders of the Orthodox Church began arguing that Romanians were descendants of the Roman Dacians and thus Transylvania's original inhabitants. The Orthodox leaders demanded, without success, that the Romanians be recognized as Transylvania's fourth "nation" and the Orthodox Church as its fifth "established" religion.

In the early to mid-eighteenth century, Hungary had a primitive agricultural economy that employed 90 percent of the population. The nobles failed to use fertilizers, roads were poor and rivers blocked, and crude storage methods caused huge losses of grain. Barter had replaced money transactions, and little trade existed between towns and the serfs. After 1760 a labor surplus developed. The serf population grew, pressure on the land increased, and the serfs' standard of living declined. Landowners began making greater demands on new tenants and began violating existing agreements. In response, Maria Theresa issued her Urbarium of 1767 to protect the serfs by restoring their freedom of movement and limiting the corvee. Despite her efforts and several periods of strong demand for grain, the situation worsened. Between 1767 and 1848, many serfs left their holdings. Most became landless farm workers because a lack of industrial development meant few opportunities for work in the towns.